The Stable Long-term Employment System of Japan: A Microeconomic Perspective*

Article type: Research Article

Authors: Hiwaki, Kensei

Affiliations: School of International Studies and Human Relations, Tokyo International University, Saitama, Japan

Note: [*] The author would like to express his appreciation to the two anonymous reviewers for their kind advice toward improvement of the present article.

Abstract: This article attempts to provide an argument for a new perspective as regards the Japanese stable long-term employment system (abbreviated as the SLES). The most important factor and vehicle of the present argument is the time-preference rate of the average worker in the ‘communal firm’. A gradual change downward of his time-preference rate is assumed to be induced by the very nature of the SLES, given a high growth trend in demand for the firm's products. In other words, implicit assurance of long-term employment by itself may encourage the worker to plan for a longer span of time than otherwise. This change in time-preference rate is most likely to induce an increase in the ‘communal saving’. The ‘saving’ partially comprising the labor's ‘interest subsidy’ tends to escalate the firm's capital formation. Attempting to introduce the new perspective, the present article is basically theory-oriented.

Keywords: Time-preference rate, common long-term interests, communal firm, communal saving, labor's interest subsidy, accelerated capital formation

DOI: 10.3233/HSM-1990-9105

Journal: Human Systems Management, vol. 9, no. 1, pp. 15-28, 1990